Labour government to limit future price hikes by energy companies

A Labour government will legislate to limit future price hikes by the energy companies after one of the so-called Big Six announced it would increase charges by almost 10 per cent, shadow chancellor John McDonnell said.

Npower had been slammed by the government and the energy regulator after the company revealed plans to hike gas and electricity prices by 9.8 per cent - a move that would hike annual dual fuel bills by £109.

With other providers expected to follow suit, McDonnell said a future Labour government would levy statutory price controls.

"We would control them. We would legislate to control them. We can't allow this to keep going on," he told BBC1's Breakfast.

"You would introduce legislation in Parliament. You would limit the amount they can increase their prices by."

According to Npower, the rise which came in the face of rising wholesale costs - had been a "hugely difficult decision".

That was met by a sharp reaction from regulator Ofgem, which said it did not see "any case" for significant price increases where suppliers had bought energy in advance.

McDonnell said Labour would encourage more local suppliers as Germany had done.

"They used to have a big six companies. What they've done is they've invested at a local level where local communities are providing their own energy, largely renewable energy, and those profits have gone back into those communities," he said.

Meanwhile, a spokesman for the prime minister said ministers would intervene if the energy market was shown to be failing. ''Obviously, we are concerned by npower's planned increases. The government is committed to getting the best deal for households,'' he said.

''Suppliers are protected from the recent fluctuations in the wholesale energy prices in which they are buying up to two years in advance. So we expect energy companies to treat their customers fairly, and are being clear that where markets aren't working we are prepared to act.''